STMicroelectronics (NYSE:STM) Announces Earnings Results, Misses Estimates By $0.03 EPS

STMicroelectronics (NYSE:STM) released its quarterly earnings results on Thursday. The semiconductor producer reported $0.37 EPS for the quarter, missing analysts’ consensus estimates of $0.40 by ($0.03), Zacks reports. STMicroelectronics had a net margin of 3.56% and a return on equity of 4.30%. The business had revenue of $3.76 billion for the quarter, compared to the consensus estimate of $3.72 billion.

Here are the key takeaways from STMicroelectronics’ conference call:

• Strong Q3 performance: Revenue reached $3.76 billion, above the midpoint of guidance, while non-GAAP EPS was $0.37 and free cash flow was $351 million. Growth was led by communication equipment and computer peripherals, industrial, and embedded processing.
• AI data center and satellite demand accelerated: Communication equipment and computer peripheral revenue rose 64% year over year, supported by AI data centers and low-earth-orbit satellite communications. ST expects about $1.3 billion of AI data center revenue in 2026 and well above $2 billion in 2027, with silicon photonics capacity planned to increase more than fourfold.
• Q4 outlook implies continued momentum: ST expects fourth-quarter revenue of approximately $4.15 billion, up 10.5% sequentially and 24.7% year over year, with gross margin around 39%. Full-year 2026 revenue is expected to reach roughly $14.5 billion, up 22.8%.
• Margin expansion remains a key opportunity: Management expects more than 400 basis points of structural gross-margin improvement from its manufacturing reshaping program once legacy fabs are closed, potentially toward late 2027 or early 2028. Mix, pricing, and manufacturing efficiencies are also expected to support improvement.
• Execution and cost risks remain: The manufacturing transition continues to weigh on profitability, particularly in analog, MEMS, and power/discrete businesses, while input-cost inflation and higher 2027 operating expenses could offset some benefits. Satellite growth may also be capacity constrained, requiring additional investment to capture demand.

STMicroelectronics Stock Performance

NYSE STM traded down $3.72 on Friday, reaching $46.27. 5,598,647 shares of the stock were exchanged, compared to its average volume of 10,135,503. The firm has a market capitalization of $41.56 billion, a PE ratio of 90.74 and a beta of 1.96. STMicroelectronics has a one year low of $21.11 and a one year high of $81.42. The company’s 50-day simple moving average is $50.37 and its two-hundred day simple moving average is $49.75. The company has a current ratio of 2.78, a quick ratio of 2.08 and a debt-to-equity ratio of 0.16.

Analyst Upgrades and Downgrades

Several equities research analysts have commented on STM shares. Wall Street Zen downgraded STMicroelectronics from a “buy” rating to a “hold” rating in a report on Saturday, September 19th. Susquehanna raised their price target on STMicroelectronics from $60.00 to $75.00 and gave the company a “positive” rating in a report on Tuesday, July 21st. Bank of America reaffirmed a “buy” rating on shares of STMicroelectronics in a research report on Friday. Citigroup reissued a “buy” rating on shares of STMicroelectronics in a research report on Wednesday, September 2nd. Finally, Zacks Research downgraded shares of STMicroelectronics from a “strong-buy” rating to a “hold” rating in a research note on Monday, August 3rd. Seven investment analysts have rated the stock with a Buy rating and five have issued a Hold rating to the stock. Based on data from MarketBeat.com, the stock currently has a consensus rating of “Moderate Buy” and an average price target of $75.06.

Key STMicroelectronics News

Here are the key news stories impacting STMicroelectronics this week:

• Positive Sentiment: Third-quarter revenue reached $3.76 billion, ahead of expectations, while demand from AI data centers, satellite operators and industrial customers supported growth. Management also highlighted a roughly $20 billion backlog. STM Q3 Earnings Call Highlights AI Growth and Margin Recovery
• Positive Sentiment: STMicroelectronics issued strong fourth-quarter guidance for revenue of approximately $4.15 billion and a gross margin near 39%, signaling sequential improvement. The company also raised its data-center outlook as AI demand accelerates. STMicro beats Q3 profit estimates, sees Q4 sales above $4 billion
• Positive Sentiment: Quarterly profitability improved, with reported gross margin of 37.3% and net income of about $291 million. Management expects a multiyear factory and manufacturing reshaping program to improve the cost base and restore margins over time. STMicroelectronics Reports Q3 2026 Financial Results
• Neutral Sentiment: New President and CTO Remi El-Ouazzane and Chief Strategic Officer Marco Cassis will coordinate technology priorities, product development, strategy and potential acquisitions. The changes could improve execution, but their financial benefits will take time to prove. STMicroelectronics Announces Leadership Appointments
• Negative Sentiment: Reported EPS of $0.37 missed the consensus estimate of $0.40, underscoring still-soft earnings power despite the revenue beat. Restructuring and fab upgrades may also create near-term costs and execution risk.
• Negative Sentiment: With a trailing P/E near 91 and shares having gained substantially over the past year, investors appear to require sustained AI growth and margin recovery. Any disappointment in those areas can pressure the stock.

About STMicroelectronics

STMicroelectronics N.V. (NYSE: STM) is a global semiconductor company that designs, develops, manufactures and markets a broad range of integrated circuits and other semiconductor products. Its offerings support applications in automotive, industrial, personal electronics, communications equipment and computer systems.

The company’s product portfolio includes microcontrollers, analog and power semiconductors, sensors, microelectromechanical systems (MEMS), connectivity products and automotive chips.